The broker has raised the price target for HSBC to 470p from 440p but has left its ‘underweight’ rating unchanged.
It expects the primary focus in the results will be on the revenue outlook, “with rates-driven net interest margin pressure in retail divisions offset by loan growth (UK mortgages, Asia retail and commercial)”.
Barclays expects a solid quarter for the Global Banking and Markets (GBM) division, where it is forecasting a 13% year-on-year increase in revenues, with Markets up 12%.
“Wealth Management could be supported by higher market levels and rebuilding activity, albeit rebound on China/HK [Hong Kong] border re-opening (likely in H2),” Barclays continued.
“We are underweight HSBC where we see valuation relatively rich at 11.5x 2022 BARCe EPS (vs. European banks sector on 9.6x), or 0.8x TNAV [tangible net asset value] for a 6.5-8% 2022-2023 BARCe RoTE [return on tangible equity]. We raise our PT from 440p to 470p, on higher capital and reducing our share count estimates,” Barclays concluded.